In a culture packed with stereotypes, definitions, and “boxes” which the entirety of humankind is coaxed to fit into, there are two legitimate categories that can truly help us understand why we are the way we are:
Proactive and reactive personality types.
Reactive people go through life allowing their circumstances and environment to dictate their behaviour and their fortune, while proactive people seek to narrate their own story. The fundamental difference between the two is that the latter takes ultimate responsibility for their life. No one and nothing but they are responsible for themselves, their happiness, and their success.
This philosophy of proactive versus reactive personality types permeates the realm of personal finances extremely well and may help people understand why they struggle to save, get out of debt, or meet any of their financial goals. Let’s take a look at the traits of the proactive versus the reactive spender and see which category you might fall into.
The Blame Game
Reactive people play the blame game, especially for their financial problems. It’s not your fault you struggle to pay the bills or afford the things you want; it’s because of external factors that have been thrust upon you: your job doesn’t pay you enough, your rent is too expensive, you were born into a poor family, you missed out on a promotion because your colleague was better qualified, you got injured and had to go to hospital, which left you bankrupt, etc.
The reactive person sees the outside world and his or her bad circumstances as the problem and in blaming their “bad fortune” on these circumstances, they go into perpetual victim mode and create a focal point for negative emotions, such as anger, irritability, depression, and/or anxiety.
Proactive people suffer the same kind of life events and challenging situations, but they don’t allow that to dictate their story by becoming a victim. Proactive people take responsibility for their life – no matter how unfair – and pick themselves up, learn, improve, and evolve to prevent being vulnerable to the same kinds of problems in the future. Since they don’t play the blame game, they don’t get caught up in a maelstrom of negative emotions.
The Reactive Spender
Reactive spenders spend money as a reaction to external circumstances, which essentially means that they spend money after something has gone wrong and requires fixing and in response to negative emotions as a way to feel better. In this way, reactive spenders are caught in an unhealthy spiral: for example, they’re unhappy because they had to cough up money to fix their car after an accident and, as a result, tend to impulse buy and indulge in retail therapy as a way to feel better.
It’s never a singular event, either. When you only react to external circumstances, you fail to proactively prepare and put guards in place, such as savings or insurance, to protect your finances from misfortune. If you’re constantly putting out fires and addressing problems, how can you build wealth and move forward? Also, let’s not forget the fact that paying up front for a damaged car or hospitalisation for an illness is exponentially more expensive than paying a small monthly insurance premium.
The Proactive Spender
Proactive spenders are proactive with their money. They get their most prized assets and possessions insured (health, home, car, laptop, phone, etc.) and they put aside rainy day savings (that earn interest, too) so that if something bad happens, they will be able to get back on their feet quicker and without serious impact on their wealth.
It’s the mind-set of people who take responsibility for their lives, wealth, and happiness to take the necessary steps to protect and grow it, and who don’t allow themselves to become bogged down in blame, anger, and regret.
You Have the Choice
The best thing about these two personality types is that you have a choice as to which one you are. It’s within your power to change your spending personality from one that is reactive to proactive, and it’s never too late.
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